Steel Authority of India has raised prices of its flat products by Rs 600 per tonne while keeping rates of longs unchanged, an industry source told. The hike by the state-owned steelmaker, coming as it does after some months of no change, will more than compensate for the lapse in railways’ Rs 300 per tonne subsidy for steel transport in the lean monsoon season.

The subsidy is provided by the railways to encourage transportation of commodities in the lean season of monsoon when demand is subdued. It lapsed September 30.

Flats are currently trading in the market at around Rs 39,000 per tonne while longs are going for Rs 34,500-Rs 35,000 per tonne.

Private steel producers did not raise the prices in October after having increased them in September quarter by 2 to 6 percent, sequentially. SAIL had not hiked the prices then.

October is usually a time for price hikes in the steel sector as general demand for new vehicles and construction and real estate picks up on the passage of monsoon amidst the festival seasonAccording to a report by Kotak Securities, domestic prices have trailed global prices due to increased supplies from new capacities. Flat products find use in automobile and consumer durable industry.

Prices of longs, a product whose supply chain is characterized by many small players, declined during July-September by 2 percent compared to same quarter a year ago due to weak construction demand. Long products are used in real estate and construction activities.

“I don’t see the prices firming up any more over the next one to two months,” an official with a company, making downstream steel products that find use at airports and malls, said.

Domestic steel demand increased 4 percent on year to 42.9 million tonnes in the first half of the ongoing financial year. The rise was led by the 16 percent jump in April-August flat product sales to 15.27 million tonnes against the 2 percent decline in demand for longs to 17.12 million tonnes, according to the Kotak report